Good News On The Jobs Front?

Two pieces of data are out today in advance of tomorrow’s December jobs report that raise the tantalizing prospect that we might have turned a corner on hiring. In some respects, it won’t be surprising at all to see an uptick in hiring for December. Even with seasonal adjustments, the numbers are likely to show the impact of holiday hiring in the retail sector. Nonetheless, the numbers out today offer the thought, or at least the hope, that something more permanent is going on. We’ve been here before, of course, only to see things peter out in the end, but good news is good news.

The December ADP number may have reflected the so-called purge effect. Workers, regardless of when they are dismissed or quit, sometimes remain on company records until December, when businesses update, or purge, their figures with ADP.

The paycheck processor estimates this change when adjusting its data for seasonal variations and, because there were fewer firings at the end of 2011 than in previous years, ADP may find it more difficult to formulate a projection.

“There’s some possibility that today’s number has been pushed up by that idiosyncratic feature of ADP data,” Joel Prakken, senior managing director at Macroeconomic Advisers LLC in St. Louis, said in a press conference after the report. “In an improving labor market it can lead to an upward bias to seasonal job gains.” Macroeconomic Advisers produces the figures in conjunction with ADP.

Applications for jobless benefits decreased 15,000 in the week ended Dec. 31 to 372,000, Labor Department figures showed today. The median estimate of 38 economists in a Bloomberg News survey forecast 375,000 claims. The average over the past four weeks declined to the lowest level in more than three years.

The decrease in firings indicates employers may be getting more comfortable with their headcounts and their economic outlooks as the year begins. Economists forecast a Labor Department report tomorrow will show hiring picked up and joblessness held below 9 percent in December.

“Claims are moving in the right direction,” said Aneta Markowska, a senior U.S. economist at Societe Generale in New York. “The labor market is pretty much treading water, buts it’s definitely not as far behind as last year.’

The news is all good for the jobs market so far in 2012: Separate reports Thursday showed a surge in private-sector job creation, a sharp drop in weekly unemployment claims and planned layoffs at their lowest level in six months.

(…)

“This continues an acceleration in employment that began back in late summer, so it propagates an ongoing trend,” Joel Prakken, chairman of Macroeconomic Advisors, told CNBC. “It also seems to be consistent with other elements that suggest improvements in the labor market.”

Prakken conceded that seasonal distortions tend to elevate the December numbers, but there are solid signs that the jobs market is thawing.

“There is a sense here that these data are strengthening,” he said.

We’ll see. It’s not all roses and unicorns out there, and it’s going to be a long road back even if job growth does start picking up. This morning on Morning Joe, for example, Steven Rattner pointed this out quite starkly:

Hopefully we’ll see a report tomorrow where job growth comes close to the 250,000 net jobs created number we really need on a regular basis to start turning the corner here. Most analysts, though, are estimating we’ll see between 150,000 and 170,000 net jobs created, with the unemployment rate creeping up to 8.7%. That makes the prospect of recovery in the near future pretty darn bleak. Tune in tomorrow.

Related Posts:

About Doug MataconisDoug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway.
Follow Doug on Twitter | Facebook

Comments

Auto sales, hotel occupancy, restaurant patronage, all point to continued growth. But it is slow growth, and Rattner is doing good public education on that.

… meanwhile on the campaign trail we’ve got the classic cognitive dissonance. People who declare themselves believers in “free markets” also believe that Obama (not a part of the “free market”) should have “delivered” more jobs because “he promised!”

“…estimating we’ll see between 150,000 and 170,000 net jobs created, with the unemployment rate creeping up to 8.7%. That makes the prospect of recovery in the near future pretty darn bleak…”

The key word there is net jobs…because we continue to rein in growth by slashing Public Sector jobs in some Libertarian wet dream of shrinking Government.
Hopefully as the slow recovery continues…in spite of the desires of Libertarians and republicans…the Public Sector shrinkage will slow and growth will accelerate.
Private Sector jobs added for 22 months in a row. And yet the future looks “…pretty darn bleak…” Growth through austerity…Libertarians and Republicans are fiscal fools.

The economy won’t improve until the people have the money to spend and stimulate business. Here are some ideas to put money in people’s pockets and encourage spending:
Have a tax free week for consumers: no Federal taxes on anything for one week a year, including income.
Residence rental would be deductible for the whole first year rent.
Straight deduction (not a percent) for medical expenses and premiums: these expenses can run $3-4,000 a year at least.
Deduction for credit card and personal loan interest: this will stimulate purchasing
Tax deduction for miles driven a year: I know gas has gone down, but not nearly enough. Truck drivers, cab drivers, limo drivers, and others who depend on gas for income are suffering. All middle class people are having it rough because of these ridiculously high gas prices: travel, shopping, going to work and church – all cost more. Let’s deduct this outrageous expense.
Expand energy saving deduction: include things like bicycles, airline/train/ship fares, tickets to movies, sports events, theme parks, etc. (when you are not at home you are saving energy)
Let people borrow off of their future Social Security benefits: they can repay these loans when they start drawing their checks later. This is our money: let us enjoy it now!
Tax rates would be tied to the consumer price index: when it goes up, tax rates go down.
To encourage spending (growth), sales tax would be a deduction
These ideas might be weird, but thinking outside the box is needed
Any other ideas?

Delmar…
With all due respect…and I agree with your basic premise of stimulating demand…fu** all that.Build-baby-build. Invest in our crumbling infrastructure. We are sitting on our collective hands watching a great opportunity slip away. Money is almost free. Labor is plentiful. The bidding environment is hyper-competitive. Build-baby-build.

“Have a tax free week for consumers: no Federal taxes on anything for one week a year, including income.”

Including capital gains? If so, I predict a massive wave of selling long-term investments, taking profits built over years without paying taxes on it, and without doing anything to make the capital more productive. Or in other words, yet another massive transfer to the 1%.

The Public Sector cut 183,064 jobs in 2011, the most in nine years…and accounted for 1/3 of the years job cuts. Small Government indeed.
Can any of the wing-nuts that haunt this site explain how a socialist President is overseeing the loss of 180K Government jobs?

@Hey Norm: Yes. In spite of the economic impact of that on the overall economy. That’s 183,000 people shifting from paying taxes to using government services, and no longer contributing (or contributing on a much smaller scale) in a mulitplicative way to their local economy – including many small local businesses. As economic policy, it is the height of short-sighted foolishness. It *only* makes sense from a political “scoring points against the party of the union ‘thugs’ and the ‘lazy’ public workers” perspective.

I checked, but he hasn’t done it yet, this is something that James Hamilton has done in the past. Hopefully he’ll do it soon and we’ll see. Needless to say, the result will be between the two numbers. :p

I started my investing career doing leveraged buy-out deals at Bain Capital, working directly for Mitt Romney and his then small group of partners. I left in 1997 to start my own venture capital firm, and part of my rationale was that I wanted to spend time creating jobs.

And a particular echo of my own past worries:

On a slightly more meta level, I have serious concerns about even the most rock star entrepreneur’s claim to job creation, on a net basis. Let’s look at the newspaper industry (just in case I haven’t depressed you enough already.) In 1990, the industry employed 460,000 people. Today it employs 250,000, and is projected to shrink to 180,000. The two companies who sucked all of the profits out of that business, Google and Craigslist, collectively employ about 25,000 people (Craigslist makes up 30 of that number. Not a typo.) So, did the heroes who founded and funded Google and Craigslist create 25,000 jobs, or did they destroy a quarter million jobs?

@john personna: Why would you expect people who can’t see that you can’t connect the dots named “don’t cut Medicare,” “keep defense spending growing,” “reduce the deficit,” and “taxes are to high” to be able to connect any other particular set of dots?